US meat giant Smithfield Foods has booked an drop in third-quarter profits on the back of restructuring charges and higher costs.
For the three months ended 29 January, net profit slumped 61% to US$79m. The figure included charges from the streamlining of manufacturing operations at Spanish processed-meats company Campofrio, in which Smithfield owns a 37.5% stake. Debt-extinguishment costs also hit earnings.
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Operating profit in the period amount to $170.5m, a 54.2% decline on the prior-year period.
Sales increased 9% to $3.48bn thanks to higher selling prices and strong demand for pork, particularly in Asia. However, Smithfield’s cost of sales increased 13.5% as it said raw material prices rose “significantly” and drove its gross profit down nearly 17%.
Total pork sales rose 11%, reflecting an increase of 19% for fresh pork and 6.2% for packaged meats, while the firm’s hog-production segment saw sales jump 17%, and its international business sales rose 1.3%.
“We have made significant progress on all of these fronts; however, we are not satisfied with our results and we are pursuing opportunities to further improve our business,” said Smithfield president and CEO Larry Pope.
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By GlobalDataHowever, he added: “All indications are that fiscal 2012 will be another very strong year for Smithfield and we expect to continue to deliver consistently solid results in fiscal 2013.”
